Investing.com - The euro firmed up against the dollar on Monday but gains were held in check amid heightened expectations that the European Central Bank will ease monetary policy at its next meeting in June.
EUR/USD was at 1.3715, up 0.15% for the day, recovering from the two-and-a-half month trough of 1.3647 reached last Thursday.
The pair was likely to find support at 1.3647 and resistance at 1.3750.
The euro has weakened broadly in the past two weeks, losing more than 1% against the dollar on the back of mounting expectations that the ECB will ease monetary policy at its upcoming June meeting to safeguard the recovery in the euro zone and stop inflation from falling too low.
Recent comments by ECB officials have indicated that the bank is open to easing and is prepared to act swiftly if necessary.
The latest drop in the euro came after data on Thursday showed that the euro zone economy grew at a slower than expected rate in the first three months of the year.
Investors remained cautious ahead of the minutes from the Federal Reserve’s latest monetary policy meeting, due for release on Wednesday, as they awaited insight on the central bank's view of the economy.
Data on Friday showed that U.S. housing starts recorded the largest increase in five months in April, indicating that the economy is shaking off the effect of a weather related slowdown over the winter.
However, the upbeat housing data was overshadowed by a report showing that consumer confidence in the U.S. deteriorated this month.
Meanwhile, heightened geopolitical tensions in Ukraine and Libya weighed on risk appetite.
Clashes between Ukrainian government forces and pro-Russian separatists in the east of the country continued on Monday, resulting in the death of one Ukrainian soldier.
The situation in Lydia remained tense after gunmen stormed the parliament on Sunday, in some of the worst violence the country has seen since the 2011 war against Muammar Qaddafi.
The euro was at more than three-month lows against the yen, with EUR/JPY down 0.20% to 138.76.
Elsewhere Monday, the dollar fell to three-and-a-half month lows against the firmer yen, with USD/JPY down 0.35% to 101.15.